Corporate travel and the costs attendant thereto is one of the few large cost items in a corporate environment that can be reduced without adversely affecting the business. Using data on where, how and when to travel and integrated monitoring control over employees travel corporate travel expenses can be reduced up to 20% without draconian rules or loss of business efficiency.
The primary components of corporate travel expense are air travel, hotels and car rentals. Reservations are typically booked through global computerized reservation systems (CRSs), which provide computerized booking capabilities to subscribing travel agencies. The primary CRSs are SABRE, Apollo, System One and WorldSpan whose majority ownership interests are held by American Airlines, United Airlines, Continental Airlines and Delta Airlines respectively. Most corporations and travel agencies receive service from only one CRS at a site and the competition amongst CRSs is intense. The CRSs publish schedule and fare data and make reservations for most major airlines, hotels and car rental agencies. They receive substantial transaction fees from participating vendors based on the number of itinerary segments booked.
The U.S. Department of Transportation (DOT) at one time allowed the CRSs to prohibit independent computer system access to the data in the CRSs. Effective Dec. 6, 1992 the DOT rescinded the restricting regulations and adopted regulations that require the CRSs to permit third parties access, subject to the establishment of certification criteria for third parties to gain.
The existing CRSs are based on 20 to 25 year old technology. When CRS systems were designated, the primary concern was keeping the processing simple so that an enormous number of reservations could be handled. To assure speed and capability, unique data streams (6 bit) and a very strict end-user command language with a limited character set was adopted that is complex and requires a trained agent to enter data or interpret responses. To assure that computer power is available for transaction processing, the CRS interfaces to the end-user are slow and permit only one user function at a time. For example, an average CRS allows retrieval of only several lines of a passenger name record (PRN) at a time and has about a one to two second response time for each block of twelve lines. Then the user has to key in a request for the next twelve lines, and so on. Since business travel passenger records can exceed 200 lines, PRN retrieval can take a substantial amount of time. When an individual traveler books a flight, hotel or car rental, all the information about the reservation is stored in centrally in the CRS. The data is purged following the travel. Since the prior DOT rule allowed the CRS to restrict system access, travel agencies and corporations did not create software interfaces with the CRSs that would allow them to capture information regarding reservations and travelers. Each CRS also held subscriber travel agencies captive by providing pre-configured computer equipment to the agency as an incentive for selecting that CRS. Most CRS equipment existing in 1993 consisted of a dumb terminal, which allowed the agent only to book travel on the CRS but did not provide storage or for manipulation to the data. A travel agency that wished to provide travel reports or access to live travel data was forced to gather such data from accounting system sources that delayed the delivery of reports and could not provide pre-trip cost information effectively. Travel agencies operate on small margins so they historically have not made a significant investment in computerization that would allow them to maintain sophisticated data systems for their corporate customers or to process information provided by the CRS. In the last two years, some agencies have developed scripting that automates some of the reservation process, usually formatting simple CRS command language from a menu.
Large corporations frequently have corporate travel departments. In addition, corporations typically enter into some form of negotiated arrangement with one or more national or regional travel agencies to manage their travel. Some corporations use an "on-site" travel agency located on the corporation's premises, which may be managed by a national or regional travel agency. In other cases, large corporations may negotiate for dedicated agents familiar with the corporation's travel policies located at national or regional reservations centers to provide booking services and 24 hour phone access for travelers. Typically, the corporation negotiates a one to three year contract with the travel agency, which defines the service to be provided, the compensation to be received by the agency, and the way that service levels will be measured and maintained. Some large corporations have actually created travel agencies that book all the corporate travel and also offer their services to the public to make profit from excess capacity.
When a corporation has an on site agency, the travel agency typically provides the personnel and computer equipment necessary to make bookings. Conventional travel agency equipment, being relatively "dumb," is not capable of interfacing with sophisticated internal computer systems that many large corporations now have that include electronic mail (E-mail), integrated local and wide area network services, accounting and data management.
Generally, the travel industry has not kept pace with the networking and communication advances of the past decade, perhaps because the industry is tied to the old airline computer systems that when they originated, pushed the state of the art, but now are antiquated and lack the user friendliness that computer users have come to expect. The fact remains that most travel arrangements are made over the phone with an agent who must slowly and laboriously use a CRS terminal. Typically four to six conversations are required to secure final travel arrangements. Information about travelers' itineraries virtually disappears until post travel credit card invoices are received or expenses reports are processed. In this environment, corporations have great difficulty finding adequate means for monitoring recent travel and entertainment expense, since normally trips are approved on the basis of cost estimates. Then, as much as three months later, management receives an indication of the actual cost of the travel including any out-of-policy travel that the employee might have made. While many travel vendors have sought to offer cost savings to corporate accounts through discount arrangements and other incentives, corporations remain largely unable to control costs because they lack the means to monitor and control costs on a day-to-day basis.
The easiest ways to obtain travel cost savings are to: eliminate unnecessary trips; insure traveler compliance with a corporate travel policy that assures the lowest fares and the use of preferred vendors; and negotiate volume discounts with providers. Observant corporate managers may be able to eliminate unnecessary trips during an approval process, but typical corporate travel departments cannot achieve traveler compliance with corporate travel policy or avail the corporation of available volume discounts. This is because the travel department does not have the data systems necessary to collect and analyze travel data nor can it communicate easily and promptly with travelers and their supervisors to make sure that the travelers travel within corporate travel policy.
As for corporate travel policy compliance, many corporations adopt some form of potential cost saving travel policy. Unfortunately, insuring compliance with policy can be difficult, since the training of all employees required just to understand the policy can cost more than the potential cost savings. In most corporations, a traveler may be required to have supervisor approval of travel destinations, but the traveler typically retains discretion with respect to airline and hotel choices. The travel agent, who is not an employee of the corporation, may be misinformed about the corporation's travel policies and typically lacks the tools to enforce policy anyhow. Airlines and other travel vendors have created powerful incentives, such as frequent flyer programs, which motivate employees to make purchase decisions favoring a preferred airline, rather than corporate cost reduction. Also, the travel environment is constantly changing and corporations do not have timely detailed information necessary to evaluate the reasonableness of costs or redefine corporate travel policies.
Airlines are extremely sensitive to shifts in market share and will negotiate volume discounts and rebates based on promised volumes for certain frequently traveled routes, referred to as city pairs (a route of travel between two airports). However, it is very difficult for corporations and their travel agencies to compile up-to-date information in order to determine popular city pair segments or to prove whether volume commitments have been achieved, much less to actually direct travel to designated vendors in order to manage volume and cause shifts in market share.
Most travel agencies currently provide limited reports on travel data to their corporate clients following the end of each month or quarter, long after the business traveler has incurred the cost. Most corporations keep track of corporate-wide travel costs by receiving corporate credit card records and travel expense report forms filed by the traveler after the trip is completed. Ticketing is therefore evaluated on a post-trip basis rather than prior to the travel being booked or ticketed. Corporation have little ability to control costs of needed travel before the travel is made.
The pricing of travel services is extremely complex and rapidly changing. There may be hundreds of different fares between any two major air destinations on a given day. Thousands of price changes are recorded every day. Besides the published fares available on CRS displays, additional discounts and other premiums are available to most corporations. These can include: discounts for travel between designated cities; discounts for travel on certain dates; discounts for a total volume of purchases at a time; mail out free travel class of service upgrades; cash rebates for volume purchases over a time period; increased agency commission on volume purchases; discounts for particular business meetings or purposes; promotional free tickets; free credits for use in purchasing preferred carrier products; and cash rebates for achieving target share of purchases on a specific carrier. Without an automated system for analyzing and comparing all discount opportunities, many tickets are not issued at the lowest fare possible but rather at the lowest published fare, the only one visible on the CRS display.
Starting in 1992, attempts have been made to provide corporate travel departments with modern user friendly software that runs on sophisticated corporate computer systems that can interface with the CRSs. Multiphase software systems for reservations, data management and expense report have been in development that have as a prime objective the presentation of flight schedules to potential travelers via their desk top computer so that they require fewer calls for reservations when they are ready to book a trip. Such software then would allow the ticket agent to note such details as cost centers, ticket delivery points and traveler supervisors and to automatically forward the itinerary of the travel via E-mail to the traveler's direct supervisor including trip purpose, projected cost and corporate cost center. In early development versions of the software, the supervisor does nothing to approve a trip. To disapprove, the supervisor contacts the travel agent. Such software could provide managers with data necessary to compile monthly reports with pictorial data that compares their division's acceptance of lower fares to the company as a whole and text details of the division's spending versus a corporate bench mark. Just this simple system has the potential for large cost savings because employees soon realize that sufficient information is available to their supervisors to spotlight out-of-policy travel. An employee who is asked by a supervisor about out-of-policy travel is less inclined to repeat such travel without a suitable excuse.
The first generation travel system available from TravelNet, Inc. had three main components. The first is software that enables a "smart" workstation to communicate directly with a computerized reservation system and function subsequently as a reservation set. The second, is the workstation display that shows data from different sources such as a CRS, corporate policies, and E-mail at different windows on the screen at the same time. It also lets an agent move information between windows and switch easily from one task to another using a mouse or other pointing device. The workstation presents CRS information in simple formats and enables agents to execute CRS functions using the mouse rather than complex keystroke sequences that are not error tolerant. An agent may choose to view CRS information in its traditional CRS format, but when it is transferred to an E-mail message, it is translated automatically into simple English. The goal of such software is to provide an enhanced working environment for the agent to speed the booking process by making relevant information from multiple different data bases immediately available.
The third component of TravelNet's software is a relational data base management system that allows programs to be written in a very flexible way to combine separate elements of data and produce meaningful information. The data base captures all elements of each reservation record at the time a booking is made and the system allows pre-trip reporting inquiry. For example, a travel agent can note how much extra expense a division will incur on a booking not made at the lowest logical airfare. The software could move the resulting report from the system into E-mail and send it to the division head's workstation, allowing the travel agent to be in an advisory pro-active role. The data includes traveler profiles and over time, can construct traveler histories so that the corporation will be able to observe individual patterns and preferences, as in the example of an employee who regularly makes a trip to a given location. Such software gives each user network access to multiple sources of information, a powerful desk top computer to manipulate them and a workstation design that lets a user easily interact with the system. As an additional feature, TravelNet software generates an automatic travel authorization request form for a prospective traveler directly from the airline PNR. The system then routes the request to a designated manager who must approve the trip.
By managing the purpose of a trip, assuring corporate travel policy compliance, and using pre-trip vendor market share information to negotiate lower prices, a corporation can take direct control of its travel cost and not counting the time savings of employees, reduce travel costs by 20%. However, there has been a need to provide such functions along with others to further enhance corporate travel control and allow it to be run on readily available desk top computers and increasingly more economical high powered multi-tasking servers.
Other software has been available that automatically combines various trip segments and routes to provide means for determining true origin to destination travel data from segment travel data stored as segment data in a travel reservation data base system. From the complex segment information, the system disclosed in U.S. Pat. No. 5,191,523, derives certain travel information not explicitly contained within the segment data, and through reference to a separate local data base or data storage unit, determines true travel costs and time data with reference to standard units providing, for example, cost per distance unit and travel distance per time unit enabling further processing to determine effective direct costs such as fare price and indirect costs such as travel costs per unit of employee time. However, the program is just geographic in nature, using the longitude and latitude information for the origin and destination of a trip to determine the great circle distance there between and the fare basis codes to determine the most restrictive fare rule applicable to the particular trip so that the entire trip can be analyzed. As necessary, the departure and arrival times are adjusted for time zone differences as well as standard daylight time savings variations to determine the trip time. The great circle distance, the fare cost and the trip time are then subject to further calculations to determine cost per mile, cost per hour and distance per hour. Such software, since it is post-purchase or after-ticket purchase is useful in providing data as to travel history. Therefore it is useful for setting policy in accordance with past travel but is not useful in managing present travel.